Royal Dutch Shell plc (RDS.A), the European oil major, has moved a step forward in the plan to sell some of its Nigerian oil blocks. The company had announced its divestment plan – comprising four oil licenses and a pipeline in the Niger delta – last year owing to oil theft and sabotage that hampered operations. Shell has signed sales and purchase agreements for some of these said assets.
Last year, Shell had put on offer its 30% stake in the four oil blocks, Oil Mining Licence (OML.V) 18, 24, 25 and 29, in addition to the Nembe Creek Trunk Line.
Shell has a divestment plan to sell assets worth $15 billion till 2015, in order to lower costs and focus on more profitable and less risky ventures. The Nigerian oil blocks divestment would be a part of that plan, if completed. However, Shell intends to continue its offshore operations in Nigeria.
The integrated oil firms, Total SA (TOT) and Eni SpA (E), which hold a 10% and 5% stake respectively in the said assets, are also set to benefit from this deal. The remaining 55% stake in the oil blocks is owned by the Nigerian National Petroleum Corp. (:NNPC).
As per media reports, the sale could amount to nearly $5 billion. While buyers are said to have been selected, the final agreement is yet to be settled, which is subject to approval by the Nigerian government.
Shell is one of the major integrated energy firms in the world with a large and diversified portfolio of development projects that offer attractive long-term opportunities. Currently, Shell has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. market in the next one to three months.
Meanwhile, one can consider better-ranked players from the integrated oil space like Sasol Ltd. (SSL). The company sports a Zacks Rank #1 (Strong Buy).